Payroll Tax in Virginia: Complete Guide 2026
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Payroll Tax in Virginia: Complete Guide 2026
Tax information is for educational purposes only and does not constitute tax advice. Consult a licensed tax professional for your specific situation.
Virginia offers a relatively straightforward payroll tax system compared to many East Coast states. The state imposes a graduated income tax with a top rate of ~5.75%, standard unemployment insurance, and no mandatory statewide paid family leave program funded through payroll deductions. This makes Virginia’s payroll administration simpler than neighboring Maryland (with its county piggyback tax and PFML) or the District of Columbia, though employers still face meaningful obligations across income tax withholding, SUI, and workers’ compensation.
Virginia Payroll Tax Rates (2026)
| Tax | Rate | Paid By | Wage Base |
|---|---|---|---|
| State Income Tax Withholding | ~2.00% to ~5.75% (graduated) | Employer withholds from employee | All taxable wages |
| State Unemployment Insurance (SUI) | ~0.10% to ~6.20% | Employer | First ~$8,000 per employee |
| Federal FICA — Social Security | ~6.2% each | Employer + Employee | First ~$168,600 |
| Federal FICA — Medicare | ~1.45% each | Employer + Employee | No cap |
| Additional Medicare (high earners) | ~0.9% | Employee only | Wages over ~$200,000 |
Virginia’s income tax has ~4 brackets, with the top rate of ~5.75% applying to taxable income above approximately ~$17,001. Because the top bracket starts at such a low threshold, most employees effectively pay close to the ~5.75% rate on the majority of their wages.
How Virginia Payroll Tax Works
State Income Tax Withholding
Virginia’s graduated income tax has ~4 brackets: ~2.00% on the first ~$3,000 of taxable income, ~3.00% on income from ~$3,001 to ~$5,000, ~5.00% on income from ~$5,001 to ~$17,000, and ~5.75% on all income above ~$17,000. The top bracket threshold of ~$17,000 is notably low, meaning most full-time employees are taxed at the ~5.75% marginal rate on the vast majority of their earnings. Employers withhold based on the employee’s Form VA-4. Virginia accepts its own state-specific withholding form and uses graduated withholding tables published by the Virginia Department of Taxation.
State Unemployment Insurance (SUI)
Employers pay SUI on the first approximately ~$8,000 of each employee’s annual wages, which is the federal minimum taxable wage base (FUTA base). New employers receive a standard rate of approximately ~2.5% for the first ~2 to ~3 years. Experience-rated employers see rates ranging from approximately ~0.10% to ~6.20%, based on their benefit ratio. Virginia’s low wage base means the per-employee cost of SUI is relatively modest even at higher rates: an employer at ~2.5% pays approximately ~$200 per employee.
Workers’ Compensation
Virginia requires most employers to carry workers’ compensation insurance. Employers may purchase coverage through private insurers or self-insure if they meet financial criteria. Premiums vary by industry classification and payroll volume. Rates range from approximately ~$0.10 per ~$100 of payroll for low-risk occupations to over ~$10.00 per ~$100 for high-risk industries.
No State Paid Family Leave Program
As of ~2026, Virginia does not have a mandatory statewide paid family and medical leave program funded through payroll deductions. Some localities and state government employers offer paid leave programs, but there is no universal payroll tax obligation for PFML. This distinguishes Virginia from neighboring Maryland, the District of Columbia, and several other East Coast states.
Comparison to Neighboring States
| Metric | Virginia | Maryland | North Carolina | West Virginia | D.C. | National Avg. |
|---|---|---|---|---|---|---|
| State income tax top rate | ~5.75% | ~5.75% | ~4.50% | ~5.12% | ~10.75% | Varies |
| Local income tax | None | ~2.25%—~3.20% | None | None | None | Varies |
| SUI taxable wage base | ~$8,000 | ~$8,500 | ~$31,400 | ~$9,000 | ~$9,000 | ~$16,000 |
| PFML premium | None | ~0.90% | None | None | ~0.26% (employer) | ~0.4% |
| Est. total employer cost per ~$50K employee | ~$4,200 | ~$5,700 | ~$4,100 | ~$4,000 | ~$5,800 | ~$4,300 |
Virginia’s lack of PFML and local income taxes makes it one of the more employer-friendly payroll environments on the mid-Atlantic coast.
Tips for Minimizing Payroll Tax Burden
- Leverage Virginia’s low SUI wage base. At ~$8,000 per employee, even the maximum SUI rate of ~6.20% costs only approximately ~$496 per employee annually. Focus on experience-rating management for the most cost-effective payroll planning.
- Use accurate Form VA-4 withholding. The low top-bracket threshold of ~$17,000 means most employees are in the ~5.75% bracket. Ensure withholding allowances are applied correctly to avoid over- or under-collection.
- Monitor legislative developments on PFML. Several mid-Atlantic and East Coast states have recently enacted paid leave programs. Virginia may follow, and advance preparation will reduce implementation costs.
- File quarterly SUI reports through iFile. Virginia’s online filing system reduces errors and provides confirmation of timely filing, avoiding penalties of ~$15 or more per late report.
- Review workers’ compensation classifications. Accurate classification prevents overpayment. Request a reclassification review if your business operations have changed.
- Consider Virginia’s business-friendly tax structure in multistate planning. Virginia’s absence of local income tax (outside of payroll) and PFML makes it attractive for employers comparing mid-Atlantic locations.
- File W-2s with the state by January ~31. Virginia requires annual reconciliation of withholding on Form VA-6 and electronic W-2 submission.
Key Takeaways
- Virginia’s graduated income tax reaches ~5.75% on income above approximately ~$17,000, effectively a near-flat tax for most workers
- SUI rates range from ~0.10% to ~6.20% on the first approximately ~$8,000 of wages, one of the lowest taxable wage bases in the country
- Virginia has no mandatory statewide paid family and medical leave program, reducing employer payroll obligations compared to neighboring states
- No local or county income tax is withheld from employee wages (unlike Maryland’s piggyback tax)
- Workers’ compensation is required for most employers through private insurers
- Estimated total employer cost per ~$50,000 employee is approximately ~$4,200, slightly below the national average
Next Steps
- See the full state picture at Taxes in Virginia: State Tax Guide 2026
- Compare state tax burdens at State Income Tax Rates Comparison 2026
- Learn about federal payroll obligations in the Self-Employment Tax Guide
- Calculate your federal bracket with the Tax Bracket Calculator 2026
- Get local help: Find a CPA Near You